Halcyon partnership buys two mines

DivyaGuha

NEW DELHI (Mint) -- Halcyon Finance and Capital Advisors Pvt. Ltd. has acquired two mines in Goa and Karnataka in a partnership with an Indian iron-ore miner.

The transactions were closed for an aggregate of $200 million, said Vandana Pakle, the investment company's chief financial officer.

The government owns all mines in India and leases them to private owners. Halcyon, citing confidentiality agreements, decline to divulge names of the lessees they bought the mines from and the co-investor.

The two mines have total estimated iron-ore reserves of close to 115 million tons, the company said. No new government permission or clearance is required as the mines are already operational.

The Goa mine is expected to provide about one million ton of iron ore a year and the Karnataka mine 2.5 million tons. The combined valuation for the transactions was about $2 per ton of ore reserves and resources.

Halcyon as an investor, typically, leads and sponsors transactions with co-investors by forming special-purpose vehicles for each transaction. The company focuses on buyouts and uses a percentage of its own proprietary capital to sponsor transactions, said Halcyon founder Abhay Soi. Investment partners bring the balance of the funds and share on the profit and returns.

In the mine transactions, Halcyon has purchased rights for 20% of the reserves with an option to convert to an equivalent stake in the special-purpose vehicle.

The deal was an opportunity for consolidation in the mining space "given the fragmentation and other challenges faced by the mining sector," Soi said.

It also may end up being a good investment for Halcyon,

"Iron-ore prices are expected to remain firm over the next year and, therefore, will benefit the miners," said Chandrani De, a metals analyst at Ambit Capital Pvt. Ltd.

(Deals India, published jointly by Mint, Dow Jones Newswires and The Wall Street Journal, is a one-stop destination for investment professionals following deal flow, deals news, private-equity and venture-capital activity in India. Read more at http://www.wsj.com/dealsindia)

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